Republican presidential front-runner Mitt Romney, whose wealth has become a central issue in the 2012 campaign, has taken advantage of an obscure exception in federal ethics laws to avoid disclosing the nature and extent of his holdings.

By offering a limited description of his assets, Romney has made it difficult to know precisely where his money is invested, whether it is offshore or in controversial companies, or whether those holdings could affect his policies or present any conflicts of interest.

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In 48 accounts from Bain Capital, the private equity firm he founded in Boston, Romney declined on his financial disclosure forms to identify the underlying assets, including his holdings in a company that moved U.S. jobs to China and a California firm once owned by Bain that filed for bankruptcy years ago and laid off more than 1,000 workers.

Those are known only because Bain publicly disclosed them in government filings and on the Internet. But most of the underlying assets — the specific investments of Bain funds— are not known because Romney is covered by a confidentiality agreement with the company.

Several of Romney’s assets — including a large family trust valued at roughly $100 million, nine overseas holdings and 12 partnership interests— were not named initially on his disclosure forms, emerging months later when he agreed to release his tax returns.

There is no indication that Romney is violating any rules, and his advisers note that his reports have been certified by the Office of Government Ethics, which reviews the disclosures required of presidential candidates.

Romney spokeswoman Andrea Saul said the disclosure “completely and accurately describes Governor Romney’s assets as required by the law.” She said Romney does not know the details of his investments since he turned them over to a trustee to manage, and that ethics officials confirmed that “everything ... was reported correctly” and completely.

Several outside experts across the political spectrum, however, say Romney’s disclosure is the most opaque they have encountered, with some suggesting the filing effectively defeats the spirit of disclosure requirements.

“His approach turns the whole purpose of the ethics statute on its ear,” said Cleta Mitchell, a Republican lawyer who has represented dozens of candidates and officials in the disclosure process, including Romney’s leading challenger for the GOP nomination, Rick Santorum.

Romney’s fortune and his association with Bain are frequent topics in the presidential campaign, with opponents charging that the way he accumulated much of his wealth — through leveraged buyouts that in some cases ended in bankruptcy and layoffs — is at odds with the interests of working-class Americans.

The ties to Bain, a private firm known for its reticence, put Romney in a rare category exempting him from the transparency rules that apply to most candidates.

Like all nominees for federal office, Romney is covered by the statute that mandates disclosure of assets. But since the 2004 campaign — when Democratic presidential candidate John Kerry declined to disclose some of his wife’s holdings — the Office of Government Ethics has permitted nominees and presidential candidates to postpone revealing underlying assets in investment accounts that have a legally binding confidentiality agreement.

Bain routinely asks its investors to sign such agreements.

But after a nominee is in office, the ethics agency requires that any undisclosed assets be sold as a way to meet conflict-of-interest requirements.

The implications for Romney, if elected, are uncertain because sitting presidents are not subject to the conflict-of-interest sections of the ethics law. Although still subject to the disclosure requirements, a president cannot be compelled by OGE to sell undisclosed assets, according to an OGE official. Romney’s would be the first presidency to face this circumstance, according to the official, who spoke on condition of anonymity because of the sensitivity of the topic in an election year.

Romney did not then take any of the options that ethics experts say might have been available: selling the undisclosed assets, putting them in a federally approved blind trust or disclosing those that have otherwise been made public.

Romney does disclose underlying assets in his accounts held by financial firms other than Bain, such as Goldman Sachs. But his advisers say Bain holdings, the source of most of his wealth, are kept confidential at the request of Bain management for proprietary business reasons. Romney’s attorneys asked Bain officials to release information about the funds, but the request was denied, according to Saul.

When he talks about Bain, Romney promotes the image of a jobs generator spawning megastores such as Staples and Sports Authority , which serve as emblems of Bain’s extraordinary financial success.

But some other Bain-affiliated companies have a history of controversy. Romney is invested, for example, in DDI, a company in California once owned by Bain that filed for bankruptcy in 2003 and laid off more than 1,000 workers.

Company chief executive Mikel Williams said the firm has returned to profitability and is expanding, in part because of recent support from Bain and others.

Romney also has holdings in Sensata Technologies, a high-tech sensor control firm that has moved U.S. manufacturing jobs to China. A Sensata spokesman declined to comment.

Most of Romney’s holdings in Bain accounts are impossible to identify because of the confidentiality rules imposed by Bain, but his investments in Sensata and DDI were revealed through Securities and Exchange Commission filings.

Saul said it is unfair to link the candidate to such firms because “Governor Romney has not had any role at Bain Capital since he left over a decade ago,” and has turned over “control and overall management” of his investments to a trustee.

Ethics office’s ‘double standard’

Under pressure, Romney recently released hundreds of pages of tax returns for 2010 and estimated returns for 2011. A comparison of those returns with his federal and state “personal financial disclosure” reports and corporate filings at the SEC revealed dozens of discrepancies – and provided a window into what might emerge if Romney revealed the assets he holds in Bain accounts.

She said she views the OGE’s exception as a “double standard” that allows very wealthy candidates to avoid disclosure because they are more likely to have their assets in accounts covered by a confidentiality agreement.

By comparison, she said, her congressional clients are required to report every asset unless they qualify for one of the few exceptions described in the law.

One indication of the lack of specificity in Romney’s disclosures is the size of his report. In 2011, it ran 27 pages, compared with 123 pages filed by Ross Perot before he announced his presidential bid in 1992 and 51 pages filed by Henry Paulson, former chief executive of Goldman Sachs, when he was nominated as Treasury secretary in 2006.

Steve Pagliuca, a current Bain managing director who sought election to the U.S. Senate in 2009, and filed a 94-page disclosure. He too was denied permission to release underlying assets in Bain accounts, according to a source familiar with the matter, who spoke on condition of anonymity because he was not authorized to speak on the topic.

Romney is not the first presidential candidate to say he is unable to list underlying holdings in a private equity account. But he is the first to do so for such a large portion of his overall assets.

“I have never seen anything like this,” said Joe Sandler, a Democratic Party lawyer who has shepherded candidates and nominees through the disclosure process for 26 years. “Romney’s approach frustrates the very purpose of the ethics and disclosure laws,” he said.

Sandler served as general counsel to the Democratic National Committee when Kerry ran for president.

As a senator, Kerry continues to say he cannot list assets in a Bain account held by his wife, Teresa Heinz Kerry, which his staff says is in compliance with Senate rules.

When he was running for president, Kerry did not list assets in Bain and half a dozen other private equity and hedge fund accounts — some valued over $1 million. A Kerry aide, who spoke on condition of anonymity because she was not part of the presidential campaign, said, “In this case, Senator Kerry wasn’t a beneficiary of Heinz family trusts, had no role in their management, and preexisting confidentiality agreements governing proprietary information were a unique issue.”

New Jersey Sen. Frank Lautenberg (D) does not list underlying investments in several private equity accounts his wife owns — and he provided no explanation with his disclosure report. His chief of staff, Dan Katz, said information on accounts owned by trusts connected to Lautenberg’s wife have proved unobtainable so far, but the senator has been told he is in compliance with Senate rules.

Senate Ethics Committee officials said they could not comment on individual members.

When he ran for the Senate from New Jersey in 2000, Jon Corzine, a former chief executive at Goldman, initially declined to release tax returns, citing confidentiality obligations to his firm. William Canfield III, a former Republican counsel to the Senate Ethics Committee, said at the time that the New Jersey millionaire had a special obligation to disclose, in part because of his extraordinary wealth.

“Mr. Corzine has to understand, while he retains some privacy rights, he has given up a substantial number of them in holding himself out for public office,” Canfield said at the time. Canfield has gone on to private practice and advised federal candidates, including Texas Gov. Rick Perry.

A spokesman for Corzine, who ultimately released his tax returns, declined to comment.

The purpose of disclosure

The 1978 Ethics in Government Act requires candidates to publicly disclose their wealth in broad ranges and to list the assets in most partnerships, trusts and pooled investment funds.

The purpose is to allow the public to identify potential conflicts of interest and the personal economic priorities of candidates and elected officials, said Fred Wertheimer, the longtime advocate who worked to enact the measure in the aftermath of the Watergate scandal.

Mitchell and several other Washington campaign lawyers say they advise candidates to reveal underlying assets, divest them if they cannot be disclosed or choose not to seek public office.

“My clients have had fund managers squawk about their ‘proprietary information’ and I’ve always been told, ‘There is no choice — the law requires disclosure,’ ” Mitchell said.

Canfield, the former Senate ethics lawyer, will not comment on Romney’s assets. But, he said, “I always counsel my clients to err on the side of disclosure” and to note on ethics forms “the same description of assets they would disclose to the IRS.” Doing so, he said, is in keeping with the spirit of the law and prevents embarrassing questions about discrepancies.

Romney’s tax forms showed holdings in a Swiss bank account, a real estate trust and nine offshore accounts not named on the public disclosure reports. In addition, 12 Bain accounts described as “fund” investments on the disclosure were identified as “partner” investments to the IRS.

Romney’s attorneys subsequently amended the disclosure to acknowledge the Swiss bank and the real estate accounts. The other assets, Romney aides said, were too small to report or had been listed, under other names, on the public disclosure. The general explanations were accepted by government ethics reviewers as were the amendments.

“Any document with this level of complexity and detail is bound to have a few trivial inadvertent issues,” Saul said at the time.

In his disclosure reports, Romney’s lawyers noted that he retired from Bain in 1999, is now a “passive investor” and “has not had any active role with any Bain entity.”

Romney’s tax returns indicate that he and his wife received “carried interest,” a controversial form of compensation that provides a share of profits to Bain managers and is taxed at the lower capital gains rate.

Romney’s compensation from ongoing Bain deals results from a retirement agreement when he left the company in 1999 allowing him a stake in Bain’s new investment funds for a decade after.

Research editor Alice Crites and news researcher Lucy Shackelford contributed to this report.

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